In a press release issued on June 11, 2018, the trader’s body Confederation of All India Traders (CAIT) announced it will hold nationwide protests on July 2, 2018 against the deal merger between Walmart and Flipkart. The trader’s association in a unanimous resolution took the decision as its National Governing Council meeting at Ahmedabad.
Trader bodies and several small retailers are rattled by the merger happened between the America’s retail giant and Indian e-commerce major Flipkart. Voicing their dissent, the Confederation of All India Traders (CAIT) has decided to hold protest against the proposed acquisition.
CAIT passed a resolution asking the government to reject Walmart’s acquisition of 77 percent stake in home-grown e-commerce giant Flipkart in a USD 16 billion deal. It firmly demands formulation of a strict e-commerce policy and of a regulatory authority governing the e-commerce sector in India.
The association claims that e-commerce companies are grossly breaching the Press Note 3 of FDI Policy issued on March 29, 2016. The CAIT Secretary General, Praveen Khandelwal was quoted saying, “Now the matter will be taken to both ED (Enforcement Directorate) and Reserve Bank of India (RBI) so that Flipkart, its owner Walmart (now) or any other e-commerce company should not follow any kind of mal-practices, predatory pricing and deep discounting.”
Press Note 3, issued in 2016 by Commerce and Industry Ministry enlists guidelines for FDI in e-commerce sector. It clearly states that no discounting is permitted and no inventory ownerships are allowed directly or indirectly by any e-commerce company.
Why a Protest?
The Confederation of All India Traders had raised its concern since the time talks have been doing rounds on Walmart acquiring 77 per cent stake in the Singapore-based e-commerce major Flipkart. The trader’s body has expressed that Indian e-commerce market since its inception is very critical due to ill-designed business practices taken up by leading e- commerce companies. They have progressed so far with a single motive of dominating and controlling the retail practices by way of deep discounts and predatory pricing which has violated the basic principles of e-commerce. In the absence of any regulatory authority and policy both in retail and e-commerce sector, the e-commerce companies are easily circumventing the law.
Further stepping units attack, CAIT has filed a petition with Competition Commission of India (CCI). It is held that Walmart would create an uneven level playing field and unfair competition in the retail sector. The petition also states that Flipkart is a combination of plundering, private sellers and selective tie-ups, where even online vendors are facing discriminatory practices and Walmart is expected to give preference to its inventory.
The CAIT alleged that even after having FDI policy, multinationals have always found an escape route. Walmart, which previously failed in the retail sector, now has chosen the e-commerce route to enter Indian markets, which is quite detrimental for other traders.
Monitoring the Merger
FDI is not permitted in the multi-brand retail and e-commerce sector, protecting several small traders and manufacturers. The Department of Industrial Policy and Promotion (DIPP) has ordered the Reserve Bank of India and the Directorate of Enforcement under Ministry of Finance to look into FDI violation issues related to Walmart-Flipkart deal.
Any FDI violation is governed by penal provision in the Foreign Exchange Management Act 1999 administered by the RBI and ED under the Ministry of Finance. Further, an inter-ministerial think tank is in the process of framing an e-commerce policy framework in the coming months.